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Thursday, November 7, 2013

Fed Prints More Money

A quick look at the Federal Reserve’s balance sheet in terms of assets has led some economist’s to wonder what the Fed is planning to do, while others say there is no plan at all. The lion’s share of assets are tied up in U.S. Treasury securities and mortgage-backed securities, which doesn’t seem like a problem when inflation rates are kept in check as they are now, but when considering the financial turmoil experienced in the last seven years there are some who believe that more quantitative easing may lead to rude awaking in this fragile financial ecosystem. For more on this continue reading the following article from Tim Iacono.

After catching up a bit on all the commentary related to the Federal Reserve’s ongoing money printing effort such as this item from yesterday and today’s offering from Jim Jubak at MSN Money where it was concluded that “The Fed has no endgame“,
refreshing the simplified graphic of the central bank’s balance sheet
below seemed like a good idea, particularly since they are rapidly
closing in on the $4 trillion mark.

Of course, there is a growing consensus that this is all benign (or
at least irrelevant as long as stock prices are rising) and that
argument is lent some credence by the low rates of inflation for
consumer prices reported in the West (inflation in developing nations is
an entirely different matter). Somehow, it seems the quadrupling of the
Fed’s balance sheet (and then some) will prove to be anything but benign.